Multiple choice

Many times we read about the 'Prime Lending rate' charged by the banks. What is the meaning of Prime Lending rate?

  1. The rate at which banks normally give loan to their most favoured customers.
  2. The rate at which banks get money from the RBI.
  3. The rate which is paid normally by the banks on their fixed deposits kept with them for a period of five years or above.

  1. Only 1

  2. Only 2

  3. Only 3

  4. All 1, 2 and 3
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A Correct answer
Explanation

The Prime Lending Rate (PLR) is the benchmark interest rate at which commercial banks lend to their most creditworthy or favored customers. It is not the rate at which banks borrow from the RBI (that is the Repo Rate).

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